Uber reported $382 million in free cash flow for the first time, an indication that the ride-sharing company’s “intense” effort to rein in costs is starting to pay off, even in the midst of a cooling economy.
Uber is still burning a lot of money, but mostly in the area of its investments in other startups. The company reported record revenue of $8.1 billion in the second quarter of 2022, a 105 percent increase compared to the same quarter last year. And it said it lost $2.6 billion, which was mainly attributed to its stake in Aurora, Grab and Zomato. It also lost $470 million in stock-based compensation. (Uber is considering selling its stake in Indian delivery startup Zomato, Reuters reports, in another move to streamline its balance sheet.)
But ultimately, Uber exceeded expectations
But overall, Uber beat expectations, largely thanks to growth in its ride-sharing and delivery businesses. Gross bookings, or total payments from customers to Uber before payments to drivers and other fees or discounts, grew 33 percent year over year to $29.1 billion. Of this, mobility accounted for $13.4 billion, while delivery achieved $13.9 billion.
People took more rides with Uber this quarter, 1.87 billion to be exact, or 21 million rides per day. This represents a 24% increase in the number of trips year on year.
But the positive cash flow, which indicates that Uber is generating more money from its business operations than it is losing, is the icing on the cake for Dara Khosrowshahi, the company’s chief executive, who promised earlier this year that Uber should get “tough on costs”.
“Last quarter I challenged our team to deliver on our profitability commitments even faster than expected, and they delivered,” Khosrowshahi said in a statement.
“Last quarter I challenged our team to deliver on our profitability commitments even faster than expected, and they delivered”
The results point to “Uber’s ability to turn a profit while navigating inflationary pressures and pockets of driver shortages that still persist in some cities,” Wedbush’s Dan Ives said in a research note.
Knowing that profitability in a traditional sense may remain elusive for the company, Khosrowshahi had set his sights on achieving profitability on a free cash flow basis rather than adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), noting that this is what the company’s institutional investors expected.
Uber has long been criticized for the way it calculates its adjusted profits. The company’s definition of EBITDA includes an unusually large list of exclusions and is widely considered an inaccurate measure of the company’s overall profitability.
There is still much uncertainty surrounding Uber’s business, including legal disputes over how the company ranks its drivers. A Massachusetts state judge recently threw out a ballot measure that was supported by Uber and Lyft to enshrine the classification of ride-sharing drivers as independent contractors.
Still, the company appears to be doing a better job of adding new drivers to the platform, reporting that it now has 5 million drivers worldwide, or a 31 percent increase year over year. Earlier this year, a nationwide driver shortage forced Uber to spend more on driver incentives and caused its stock to plummet. The company said last week that it would begin allowing drivers to see fares in advance before accepting ride requests.
Uber shares are down 15 percent since the market opened.
Updated August 2 at 11:13am ET: Updated to include news that Uber is considering selling its stake in Zomato.